Question about selling home with assumable FHA loan

[Jon Ostojic]

Hello all. Thanks ahead of time for the time and input. So we bought our first home in 2009 with an FHA loan at 3.75%. I know the load is assumable. We moved and have rented it out for about 5 years. We want to sell and reinvest and the tenants have agreed to purchase, assuming we can work out all the financing and they can get approved. I'm offering them the option to assume our loan but I'm trying to sort out the details. They don't seem to be very financially savvy, so I'm trying to help them see the benefit and understand their options at least.

The balance on the loan is $163k and we've made extra payments so the loan is at about the 18 year mark on the 30 year amortization curve/table, with no more PMI. The agreed to sale price is $270k. So as I understand it, they could assume our $163k loan, then of course they'd have to come up with the rest between downpayment and a second loan. It sounds like they're looking at FHA loans anyways as the downpayment is a stretch for them.

So can they just get a second FHA loan to cover the difference? Is that how that would work? Or on an assumable loan, does it only really work if you bring the balance as cash?

If there are any good resources someone could point me to I'd appreciate it.